As India is moving towards growth, the government is trying to strengthen its manufacturing sector. Its manufacturing sector is emerging as a global powerhouse. Many mutual fund houses have started focusing on this sector. They have been performing well in major market indices. These funds invest in companies of various market capitalizations within the manufacturing industry. This offers diversification and benefits of active portfolio management. Thus, significant growth opportunities are provided to the investors.
Ongoing Manufacturing Mutual Funds
Recently, Mahindra Manulife Mutual Fund launched Mahindra Manufacturing Mutual Fund. The last day for subscribing this fund was June 14, 2024 and its continuous trading will start from June 26, 2024. The main aim of this fund is to achieve long-term capital appreciation by primarily investing in equities and equity-related securities of manufacturing companies. This manufacturing fund carries a ‘Very High’ risk rating, so all the investors should carefully consider their risk tolerance before making any investment.
Baroda BNP Paribas Manufacturing Fund is a new mutual fund focusing on India’s manufacturing sector. It is managed by Jitendra Sriram and invests in companies that manufacture goods in India. This fund is open for subscription until June 24, 2024. They seek to benefit from the government’s support and economic conditions, which are in favor of India’s growth as a manufacturing hub.
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Performance and growth prospects
Mutual funds focusing on the manufacturing sector have shown strong performance in market indices like the Nifty 50 and Nifty 500 Multicap over various timeframes. For instance, the Kotak Manufacture in India Fund has given a return of 32.02% in 2 years, Aditya Birla Sun Life Manufacturing Equity Fund gave a return of 19.05% in 5 years, and ICICI Prudential Manufacturing Fund gave a 26.96% return over five years.
The success of these funds has contributed to the overall development of the mutual fund sector. As the manufacturing sector grows, many funds benefit from its expansion. However, roses always come with thorns. If the manufacturing sector experiences a downturn, the performance of these funds might suffer.
Government Initiatives Bolstering Manufacturing
The Indian government’s initiatives like ‘Make in India’ and Production-Linked Incentives (PLIs) are formed to develop manufacturing Sector. With these policies, there will be development in various manufacturing industries like electronics, textiles, pharmaceuticals, and automobiles. They aim to make India a self-sufficient manufacturing hub and increase the prospects for manufacturing mutual funds.
Diversification and Active Management
Rather than a single-stock approach, manufacturing mutual fund gives investors an opportunity to invest in a pool of manufacturing related companies. Fund managers actively select and monitor these companies and manage the portfolio by maximizing returns.
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Analyst’s Perspective
Manufacturing Mutual Funds are new, and their performance data is limited. But, their potential for high returns makes them an attractive option for investors. According to Kshitiz Mahajan, managing partner and CEO of Complete Circle Wealth Solutions, these funds could be a valuable part of an investment portfolio. He also gives substantial scope for growth in India’s manufacturing sector.
Thus, investors who are looking to invest in India’s manufacturing growth should consider allocating a portion of their portfolio to manufacturing mutual funds. They should keep in mind all the associated risks and their own investment goals.
About Author
Mr Radhesh Tarang Shah, is a third-year management student at Institute of Management, Nirma University. He has a passion for writing articles and poems. He has experience as a financial analyst, author, news writer, marketer and social worker
